In a filing with the SEC, Google revealed it plans to divest itself of 29.4 million shares of stock in 4G mobile operator Clearwire. Google plans to sell the shares at $1.60 apiece, making the sale worth about $47 million to the Internet giant. That sale price is a substantial discount over Clearwire’s current trading price of about $2.70—although Clearwire’s stock has dipped a bit since news of Google’s pending sale broke. However, perhaps more significantly, the sale represents a loss of over $450 million for Google, which initially invested $500 million in the company back in 2008.
Clearwire was one of the first companies out the door with so-called “4G’ mobile broadband technology, investing in building out a nationwide network based on WiMax technology while carriers like Verizon and AT&T were still struggling to deploy 3G technology. Mobile operator Sprint was also betting in WiMax, figuring the technology would be able to roll out years ahead of LTE, giving the company a substantial jump on the looming 4G marketplace. Sprint was the major investor in Clearwire, although several other tech giants also bought into Clearwire, including Intel and Comcast.
However, Clearwire’s WiMax plans didn’t quite work out: the company wasn’t able to raise enough money to build out its network quickly enough to become a dominant player in mobile broadband before mobile carrier’s 3G networks became major players and LTE technology became reality. The company has lost almost $2 billion in the last two years.
Clearwire is now in the process of adding LTE capability to its network, and recently received a $1.6 billion cash infusion from its majority shareholder Sprint. With satellite-assisted LTE provider LightSquared in trouble, Sprint may have to rely even more heavily on Clearwire to offer LTE services in the United States. Clearwire will also be able to offer wholesale LTE services—firms like MetroPCS, Cricket, C Spire, and even Dish Network or T-Mobile might be possible customers.
Google offered no reason for its decision to sell off its Clearwire stake, although last year Google was one of the Clearwire investors that refused to sink more money into the firm. Some speculation has Google’s recently-approved acquisition of Motorola Mobility playing a factor in the sale decision.